Policymaker against lifting interest rates

| June 2, 2011 | 0 Comments

Policymaker Paul Fisher has said the Bank of England is right not to have lifted interest rates from their current low of 0.5%, suggesting the economy is still too fragile.

His comments in the Daily Mail come despite calls from business groups to raise interest rates to curb inflation – which is currently running at more than double the target of 2%.

However, Mr Fisher is open to the possibility of a further injection of cash via the Quantitative Easing (QE) scheme to boost the economy.

Fellow policymaker, Adam Posen, has voted for the QE scheme to be re-started since last October.

Meanwhile, Mr Fisher said domestic consumption was too fragile, hit by households which are being squeezed by soaring inflation, rising unemployment and muted wage growth.

He believes interest rates need to stay low until the economy is through the current “soft patch”.

Mr Fisher was speaking just one week before the Bank of England’s next rate-setting meeting. Many experts suggest interest rates will be lifted in August, to tie in with the central bank’s quarterly growth and inflation forecasts.

Meanwhile, his comments come shortly after fellow policymaker, Andrew Sentance, continued his argument for higher interest rates.

Mr Sentance reiterated that the bank faces losing its credibility if it is not seen to be fighting inflation.

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